The Bank of England's decision and the speculation surrounding it will continue to dominate price action this week. The markets seem to have priced in a 25 basis point cut for this Thursday, with many economists also expecting some additional policy measures to be seen. Retail banks are also expected to start charging those that are depositing, adding further complications to the policy impact. The BoE rate decision and inflation report are both scheduled for release on 12pm Thursday.
Yesterday’s economic calendar was jam packed with manufacturing data from both the US and the UK. Firstly, UK Manufacturing PMI continued to contract. The disappointing figure registered at 48.2, its lowest level since early 2013. It was one of the first high tier data releases that illustrated the effects of Brexit. In the afternoon, US ISM Manufacturing PMI was released. The figure showed manufacturing in the States continued to expand at 52.6, but the reading was lower than expected at 53.2.
Further UK data will be under the microscope today, as Construction PMI is released this morning. The gauge is forecast to decline further into contraction territory at 44.2 falling from the 46.0 reading seen last month. Also today, the Reserve Bank of Australia cut their interest rates from 1.75% down to 1.5% as expected. As markets had already priced in this 25 basis points cut, the impact on the AUD was muted. This new low of 1.50% attempts to pick up dwindling economic growth and assist weak inflation in Australia.